Markets stay in established ranges (page 2 of 2)

Selling by Japanese exporters around the toppish 120 level also supported the yen. Meanwhile, the yen was also helped by an upgrade in the government's economic report, its first in five months.

In the government's August economic assessment, it cited that, the economy remains flat overall, yet the environment surrounding the economy, such as equity prices and the U.S. economy, is showing signs of change. Separately, Japan's FSA and economics Minister Heizo Takenaka expressed the government's hopes that an economic recovery in the U.S. and Asia would lead to a rise in Japan's exports.

As the week progressed, the dollar edged up against the Japanese currency ahead of the sale of U.S. treasuries and a fall in Japanese share prices. The Japanese currency was also curbed by speculative sales and selling by Japanese mutual fund operators, who were seen buying the euro, Canadian dollar and other currencies to set up new foreign currency funds.

However, greenback's rise was short lived as it fell below the 119 level, due to stop-loss orders below 119.50 yen, but speculation was that investors were trading on an intelligence newsletter suggesting diminished Chinese/Asian central bank interest in the U.S. Treasury market.

But markets were bracing for yen-weakening intervention by the Bank of Japan after the Ministry of Finance said that it had spent 4.6116 trillion yen on intervention in the April-June quarter to stem the yen's rise, which is seen as a threat to the country's export-led economy. The quarterly figure, equivalent to $38.36 billion at current rates, was the biggest since Japan began releasing figures in 1988.

Range for the week: 117.00 - 122.00

Sterling

Sterling started the week on a firm note mainly due to the encouraging tone of the latest economic reports.

The Chartered Institute of Purchasing Supply showed Britain's construction industry expanded at its fastest pace since November 2002, mainly due to healthy new business flows. The figures underlined the fact that the UK economy is recovering from the global downturn.

However, dollar's gains versus other major currencies after the successful auction of the five-year Treasury bond drifted the pound lower. Sterling was little changed against the dollar after the widely anticipated decision by Britain's central bank to leave rates steady at a 48-year low of 3.75 percent.

The end of the week saw sterling fall against the greenback, largely due to the U.S. dollar's rise against other major currencies and lack of economic data in Britain. Next week the main focus will be on the Bank of England's quarterly inflation report.

Despite signs of economic recovery, some analysts expect the report to reveal a downward revision to the central bank's May forecast of 2.25 percent GDP growth in 2003. Besides the inflation report, markets will watch closely price data, both at the wholesale and retail levels.

The producer price index will be released on Monday and is forecast to rise 0.1 percent on the month and 1.2 percent on the year, while the retail price index due on Tuesday is expected to be below expectations and may pressure sterling lower.

Range for the week: $1.5850 - 1.6350